One of the core aspects of cryptocurrencies to date has been the decentralization aspect of it. This means that a single central authority does not have excessive control over a given network or currency. Decisions will be made after a consensus is arrived at.
Despite this, there has been a lot of talk about central banks introducing some sort of digital currency in their jurisdiction. The head of the International Monetary Fund (IMF) Christine Lagarde believes that central banks could be strongly considering this option.
She believes that digital transfers of money can be made a lot safer going forward. Non-cash forms of payments are taking over, which means that central banks and governments have a lot on their plate to deal with.
There have been concerns from various regulators about the level of oversight currently in the digital currency space. Speaking in Singapore at a conference, Lagarde said: “I believe we should consider the possibility to issue digital currency. There may be a role for the state to supply money to the digital economy. The advantage is clear. Your payment would be immediate, safe, cheap and potentially semi-anonymous… And central banks would retain a sure footing in payments.”
She went on to point out that central banks in the likes of Uruguay, Sweden, China and Canada were putting significant consideration into launching their own digital currency.
The main issues for central banks concern the anonymous aspect of transactions. They want to ensure that criminals will not be able to launder money or terrorists raise finances without there being a paper trail.
There are ways around this for a central bank issued digital currency in the way that it is made up. Then the people will be able to reap the benefits from making payments that are blockchain based.